Things to Consider Before Retiring Abroad

April 5, 2012

By Jeanie Keogh

You’ve passed the dream phase of owning a beach house in Bali and you’re ready to start thinking practically about retiring abroad. Now it’s time to do the research to see whether you are truly ready – or cut out for – the reality of moving abroad.

It is one thing to be enticed by glossy real estate advertisements selling a beautiful retirement home in Morocco for $40,000 (CDN). It is quite another to work out whether the health care, taxes and cost of living and culture in Morocco make it an ideal place to grow older.

According to Statistics Canada, most retiring Canadians either return to the country of their birth (if they are not natural-born Canadians) or head south of the border to the United States. Fewer numbers head to Mexico, Costa Rica and Caribbean Islands, making up a healthy amount of the ex-pat retirement communities there. Of the Commonwealth countries, the United Kingdom and Australia are the other major destinations that attract the rest. Although if you’re not the safety-in-numbers type, there are many other lesser-known options if you’re willing to do a little bit of pioneering. Regardless of your choice, here’s what you should consider first:

Health Care Considerations of Living Abroad

Having lived in a few countries and sampled their medical wares, I can attest that, despite the World Health Organization rankings, there is really no place like home when it comes to free (and hassle-free) access to health care. There are few things more comforting than an English-speaking doctor and not having to pull out your bank card or fill out insurance forms when in a medical emergency.

While abroad, if you don’t plan to become a permanent resident or a citizen, your only option for health coverage is through private medical insurance which is much more costly as you age and when you have a storied medical history. Also, depending on what country you are going to, insurance companies might apply a different rate. For more information on the quality of international health systems as they relate to ageing populations, visit the World Health Organization.

Tax Implications of Retiring in a Foreign Country

Make sure you won’t be subjected to double taxation by both Canada and the foreign country of your choice. From a tax standpoint, it might be more economical to stay abroad for only 6 months of the year instead of making a permanent move. Some countries without elaborate tax structures will impose high duties for imported goods on your belongings. Check also for whether you will have to pay an estate tax.

Buyer be warned – the flip side to countries that are known as tax havens sometimes have exceptionally high real estate prices. TaxSites.com is a comprehensive website that offers a wide range of information about international taxes and countries that have tax treaty agreements with Canada.

Crime Rates in other Countries

Depending on what keeps you awake at night, crime is relative. North American media often paints a distorted picture of otherwise safe foreign countries. By way of comparison, according to the United Nations Office on Drug and Crime, you are more likely to die by homicide in the United States than most other countries in the world (wars aside).

Cost of Living Abroad

Over the last 10 years, the Canadian dollar has been as low as $0.62 USD and as high as $1.05 USD. Research the financial and political climate of your desired country with as much interest as you do the physical climate, especially when the Canadian government is currently discussing modifications to the Canada Pension Plan and Old Age Security. If you are heading to a country where the cost of living is considerably cheaper than in Canada, you will still need to budget for hidden costs like higher travel costs back to Canada, potentially higher medical insurance or higher energy costs like year-round air conditioning.

Culture Considerations

If you’ve never lived abroad, there is something you need to know before you do. It is not a vacation. It is one thing to escape to an exotic place with a return ticket but it is quite another to live there year-round. At first, the fact that you are a foreigner will feel liberating. Later it feels alienating and, at times, debilitating. Also, while you leave some of your problems behind, you also leave your family and your friends. Some places that cater to tourists have an innate dislike for foreigners, despite their appreciation for Western money.

There is also an ethical consideration to make. Some developing countries’ governments have opted for a get-rich-quick scheme to save their economies by letting foreign developers build without restrictions. While you might be able to justify your presence there as helping the locals survive, the people who clean your rooms and fix your meals have seen their landscape and their culture change drastically by the influx of more and more snow birds flocking to their country. If you do decide to go, at least make the attempt to speak the language and learn their culture.

There are many benefits to retiring abroad and by properly researching and preparing you can determine the best place to spend your golden years.

Stay tuned for my picks for the Top 6 places to live in the world!

Have you considered retiring abroad? What are some locations you are considering and why?